How To Avoid a Retirement Shortfall

Never Too Soon to Start

It’s never too soon to start saving for retirement — and there’s data to prove it.

Nearly half of Americans (45%) who stop working at age 65 are at risk of running out of funds in retirement, per a Morningstar (MORN) report. But the research also reveals a clear way to mitigate this risk.

Start Early, Retire Late

Retirement planning takes foresight and understanding that stashing money away in the moment will be beneficial later on. But this delayed gratification, as economists call it, isn’t the easiest to stomach when you’re a job starter or trying to save up for a big purchase, such as a home.

Even so, starting early may be the most effective strategy to build the requisite savings, as gains compound over time. Roughly eight in ten Americans (79%) who spend 20 years or more contributing to a defined contribution plan like a 401(k) will likely save enough to fully fund their retirement, per the report.

If you are unable to get an early start, it might help to postpone retirement by a few years, according to Morningstar. Less than a third of Americans (28%) who retire at age 70 risk a retirement shortfall, per the report.

401(k) Magic

Employers can help workers save for retirement by offering plans, such as the 401(k), which is a tax-efficient savings vehicle that allows the owner to invest the funds in the plan, for example into stocks or bonds.

What’s more, many employers offer to match worker contributions up to a certain percentage or amount of employee contributions, padding out these nest eggs even faster.

Taking advantage of workplace benefits like that can boost retirement savings significantly, especially when they’re being used from the start of a career onwards.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

SOSS24082701